buyout settlement clause

A provision found in media liability insurance policies allowing an insured
the option to refuse settlement of a claim for an amount offered by an insurer
and agreed upon by a claimant. The clause allows the insurer to tender that
amount to the insured, thereby "buying out" of the claim. At that point, the
insured takes complete control of the case, bearing the risk that ultimate settlement
and defense costs will exceed the buyout figure. If the case is resolved for
less than that amount, the insured may keep the difference.